California is 24/7 Wall St.’s “Worst Run State” for the second year in a row. Due to high levels of debt, the state’s S&P credit rating is the worst of all states, while its Moody’s credit rating is the second-worst. Much of California’s fiscal woes involve the economic downturn. Home prices plunged by 33.6% between 2006 and 2011, worse than all states except for three. The state’s foreclosure rate and unemployment rate were the third- and second-highest in the country, respectively. But efforts to get finances on track are moving forward. State voters passed a ballot initiative to raise sales taxes as well as income taxes for people who make at least $250,000 a year. While median income is the 10th-highest in the country, the state also has one of the highest tax burdens on income. According to the Tax Foundation, the state also has the third-worst business tax climate in the country.

VA came in 9th best btw. At least for now until the cuts start in coming years.

Economically, Virginia has been in very good shape compared to many other states in the region. The state’s poverty and unemployment rates are among the nation’s lowest, while median household income is one of the nation’s highest, at nearly $62,000. Given that the state is home to the Pentagon and large defense contractors, it could be hit with job cuts if the nation goes over the fiscal cliff. The automatic defense cuts set to take place if that happens mean Virginia could lose more than 207,000 jobs, an estimated 136,000 of which would be related to the Department of Defense. As of 2011, government spending accounted for 18.7% of Virginia’s GDP, the fourth-highest percentage in the nation.